Shriram City divests stake

Shriram City Union Finance Ltd (Shriram City) has announced that Merrill Lynch, Chrys Capital and UK-based Cambridge Place have acquired 40 lakh equity shares each of the company. Merril Lynch and Chrys Cap acquired the shares through their arms Indopark Holdings and Van Gogh, respectively.

Indopark, Van Gogh and Cambridge have acquired the shares at Rs 160 per share with a face value of Rs 10, totalling an investment of Rs 192 crore. Consequently, each of the three companies have now acquired an equity stake of 10.33 per cent each in Shriram City.

The Shriram City's move to divest its stake comes in the wake of the company's plans to expand its retail financing operations. "We will use the capital infusion to support the growth plans of the company and increase the quality of our business," said R Thyagarajan, chairman, Shriram Group.

Consequent to the divestment, Shriram City's promoter equity will go down to 53 per cent from the current 84 per cent.

"This fund infusion has increased our current equity capital from Rs 27.1 crore to Rs 43 crore. Our clientele base is around 12 lakh customers in our chit fund business, of which 4 to 5 lakh are small entrepreneurs. The potential for deployment of funds will be greater to these businessmen and Shriram City expects to issue Rs 5,000 crore in credit to them. This credit lending will lead to the creation of more than 100 large organisations," Thyagarajan added.

Shriram City will gradually increase its portfolio size to Rs 2,500 crore, he said.

"Shriram City's assets under management is Rs 1,500 crore on the books, with Rs 500-600 crore in the truck financing sector, Rs 500 crore for consumer durables, Rs 400-450 crore for personal loans and Rs 100-150 crore for secured personal loans," said Subashri Sriram, executive director, Shriram City Union Finance.

Shriram City has around 600 branches and over 2,000 marketing officers. The company will utilise its wide network to further its business expansion.